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Parent out of money, looking for advice
Old 07-05-2013, 11:43 AM   #1
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Parent out of money, looking for advice

Looking for any input on a thorny issue. Have had a moderately rocky relationship with my mom (dad is deceased) but I call once a week and visit about twice a year. Last phone call she informed me that she is "broke" and essentially down to social security (1400/month). She has been living on about 34k per year (SS plus drawdown on retirement) with sporadic small cash from me and whoever she can get to give her small amounts. To give some background, I paid for college and postgrad on my own. She lives in a house worth around 180k and has a meeting with someone this week about a reverse mortgage. She is 74 and her health is declining fairly fast with severe erosive arthritis, hearing loss, and few other minor issues. High likelihood of wheelchair/walker within two years and high likelihood of hip fracture as well. My sister lives about 10 miles away and I live 5 hours away. My sister and I would like her to sell the house (again, her only asset) and move to a smaller house much closer to my sister and get an SPIA. I need to add that she cannot manage money, so anything other than an SPIA is playing with fire in terms of ripping thru this in a few years. I would also add that there is an implied solution that me and my wife just fork over the 18k/year balance that she needs to keep up her lifestyle. And that is not going to happen. Any advice or personal experience greatly appreciated.
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Old 07-05-2013, 11:57 AM   #2
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I don't have any experience with this, but I think your ideas of having her move to a smaller house nearer your sister, and buy an SPIA, sound like great ideas. I don't think you should feel that you must fork over the $18K/year, when she could be taking care of herself independently by downsizing and getting an annuity. She may not want to do either, but her choices are limited at this point.

I am assuming that the downsized house is a decent place in an acceptable neighborhood, and similar to her present home, but just smaller, less expensive, and closer to your sister.

Good for you to be helping her and taking on this responsibility.
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Old 07-05-2013, 12:02 PM   #3
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Sounds like the bigger problem will be in home care due to declining health. Sounds like a nursing home would be in order while she has the home as a asset to qualify for a decent place (then let medicaid/medicare eat the rest).

FWIW we committed my grandmother to a nursing home at around the same age. She thought she going to visit my aunt and simply never returned. Never would have happened any other way.
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Old 07-05-2013, 12:05 PM   #4
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BigE, I think you are on the right track with downsizing and the SPIA.

Your mom may not be ready for a nursing home but have you considered an assisted living facility? Sounds like that might be the best option for all involved.
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Old 07-05-2013, 12:07 PM   #5
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If she's going to have mobility issues soon, I'd suggest an apartment rather than a replacement house. Maybe even one that would become subsidized after she runs through the proceeds from the house. I know my mother has looked at places like that and they seem doable.

That said, my 88-year-old mother has been living on $12K social security, and drawing down a very small amount of savings (started at $30K) for 7 years. My siblings and I pitch in for "luxuries" (cable tv, travel). That woman can stretch a dollar! But she's always been like that.
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Old 07-05-2013, 12:48 PM   #6
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Yup, sounds like you know where to go with this. I would also suggest not getting a house, if she can still live independently for now, rent an apartment, and have a plan set up for moving her in the not so distant future to a nearby nursing home, maybe assisted living if the budget allows, though it sounds like it will be a stretch to do that. Going to need to SPIA the remaining asset so that she can qualify for Medicaid.
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Old 07-05-2013, 12:53 PM   #7
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I would suggest an independent living apartment that is affiliated with an assisted living and Nursing Home that way your Mom only has to move once after the sale of the house.
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Old 07-05-2013, 12:59 PM   #8
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Your plan in general sounds well thought out, but perhaps a single family home will be too much work for her before too long. Plus it will cost more to heat, cool, insure, furnish, etc. than a studio apartment or condo.

I'd check into assisted living, condos, apartments, mobile homes, etc.

I'd also probably talk to an elder care attorney about planning for Medicaid / eventual nursing home stay. You might also offer to design an annual budget for her and provide her with some books on frugal living and budget cooking so she has the tools to live okay on a limited budget.

I read an article the other day about a senior citizen on a tight budget having canned soup for lunch. Canned soup on a cost per calorie basis is really expensive, but a lot of people just don't understand that. Maybe a book on frugal cooking and eating whole foods to save money would be good.

Good luck.
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Old 07-05-2013, 01:02 PM   #9
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Originally Posted by Moemg View Post
I would suggest an independent living apartment that is affiliated with an assisted living and Nursing Home that way your Mom only has to move once after the sale of the house.
My mom did this.

My mom got on a waiting list, then when she got to the top of the list, she sold her home and moved into such a place. A few years later, a heart attack put her in the hospital. She is too old and decrepit for any surgery. When she got out, she went to the assisted living part with a new wheelchair and oxygen bottles. She had her defib turned off, so that the next time her heart stops, it won't get restarted.
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Old 07-05-2013, 01:08 PM   #10
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MIL was in a similar situation a few years ago. Since she refused to sell her house and downsize, she had no other choice but to do a reverse mortgage on her house.
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Old 07-05-2013, 01:19 PM   #11
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Have you looking into what it would cost for her to buy the smaller house closer to your sister? How much would that leave to buy an SPIA?
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Old 07-05-2013, 01:38 PM   #12
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I also recommend the independent living apartment. My mom moved into a Good Samaritan retirement village/apartment about 15 years ago. It cost about $35K to get in at that time but 1/3 to 1/2 of that is refundable if you move out or at death. She pays about $1K a month for a small one bedroom but it includes all utilities (except phone) and includes 20 meals a month at the communal dining hall. There are also 2 bedroom units and a few townhomes available. Many of her neighbors use walkers and a few are in wheelchairs but are able to maintain their own apartments.
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Old 07-05-2013, 01:49 PM   #13
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Agree with the apt. idea with a move to state subsidized apt. when applicable. We had my MIL in a condo owned by her son but rent paid by all till they opted to sell it. She then moved to subsidized housing right across the road where they take a specific portion of her SS and must maintain a very low bank balance. Nice enough place, very close to stores in a nice area. I would have no problem living there if I were to live that long. We send gift cards for the grocery store, Wal-Mart, and such so it doesn't show up in the checking. Do try and get her closer to sis, MIL is close to needing help getting to the stores and Dr's at 89.
She won't move in up north with us as we're told it's too cold in Ma.
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Old 07-05-2013, 01:53 PM   #14
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not knowing all the issue, take this comment for what it is worth. If her home is her sanctuary, her memories to her life, let her make the call. A reverse mortgage may not be the best financial decision, but if moving is going to make her unhappy, then don't push it. I know this could leave her in a worse situation down the road, but let her know your concerns and respect her call.
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Old 07-05-2013, 04:17 PM   #15
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While our circumstances are a little different, I would not recommend buying another home. Rental is probably easier. A single incidence can change the living arrangement requirements overnight. By not having to worry about a home sale, it makes the transition much easier. Good luck, this is an incredibly difficult situation. This issue is the single greatest threat to our retirement and has resulted in some serious "discussions" between the siblings.
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Old 07-05-2013, 05:00 PM   #16
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It sounds like she is going to be needed assisted living sooner rather than later.
So selling the house and renting in the short term makes the most sense. I certainly see no reason to downsize into a smaller house. Unless she can walk away with a least 5 years living expenses.

How is she doing mentally? That makes a big difference.
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Old 07-05-2013, 05:10 PM   #17
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Downsizing to a smaller house sound like a lot of work for a benefit that is not entirely clear.

Unfortunately, your options are limited by her cooperation. An independent or assisted living community near one of her children is a good option (if she agrees) but you need to make sure they take Medicaid as well. If so the typical agreement is the prospective resident has resources to pay at least 2 or 3 years at the normal price, and if they run out of money after that the facility will take Medicaid.
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Old 07-05-2013, 05:23 PM   #18
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My Mom is also in an independent living facility . It is great . She has a large one bedroom apt. . There was no fee upfront just $1200 a month that includes the apartment , all utilities , a cleaning lady once a week and nightly meals , transportation and activities . The best part about it is when she broke her shoulder and needed rehab and a nursing home it was available at the same place.
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Old 07-05-2013, 05:52 PM   #19
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My mom spent nearly 12 years in a great facility.
Independent apartments with weekly cleaning/laundry/linen changing service.
Three meals a day in a dining room in the same building.
Home care (basically assisted living services) available as needed for an extra charge.
Total cost about $2,500 a month as of 2010. She loved it, and made many friends there.
The company involved has a great number of these places around the country. Holiday Retirement

Later, she needed more care (Alzheimer's) and had to move to a different facility at over twice the price. But the point is that there are usually good options.
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Old 07-05-2013, 07:48 PM   #20
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I want to thank everyone for taking the time to reply and to share personal experience in some cases. Lot of good ideas and thoughts, especially the independent apartment idea. I do think my mom is going to be resistant to giving up her home and lifestyle (and it will be her choice) so I am worried she will go for a reverse mortgage and I'm not sure what happens when she can no longer live there in a few years? Unfortunately, I think she will balk at the idea of an apartment. My wife and I are thinking of floating the idea of us buying a very small single story handicap accessible home close to my sister and charge her no rent and then she can SPIA all proceeds from the house and at least we can sell the house after she is gone. Not keen on taking on this financial risk though.
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